Suppose Policy Makers Want to Increase Y and Increase NX

question 25

Multiple Choice

Suppose policy makers want to increase Y and increase NX.Which of the following policies would most likely achieve this?

• A)an increase in government spending
• B)a real depreciation
• C)a reduction in taxes and an increase in the real exchange rate
• D)an increase in the real exchange rate

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Definitions:

Below cost

describes selling a product at a price less than its production or acquisition cost, often to clear inventory or attract customers.

Consignment

involves goods being given to a third party to sell, with the owner retaining ownership until the items are sold.

Merchandise

Goods that are bought and sold in the course of business, typically in a retail or wholesale environment.

Inventory

The total amount of goods and materials a business has in stock, either for sale or used in production.